Broker Check

Don't Rock the Boat!

July 13, 2023

Do you remember being a child and thinking your parents had it all figured out? Your childhood was filled with questions that Mom and Dad always had answers to! Do you remember becoming a well-adjusted adult and asking your parents about something in your area of expertise? You found that you were lobbing them softballs as a child, and maybe they don't have the well-rounded knowledge you once assumed. Maybe they are just like everyone else? Their expertise may be limited to their profession and a couple of hobbies they are passionate about.

As a parent of four young, exhaustively inquisitive daughters, I will level with you. I don't always answer questions to expand my children's minds but to give them just enough information to make them stop asking me so many questions. In a perfect world, I would come home every day, throw on a toga, and be Socrates to these little sponges, but neither I nor this world is perfect. 

Unfortunately, this shared human nature is not exclusive to parent-children relationships; it extends to all parts of our life. Financial advisors are very much this way. You see, both sides of the interaction have a problem. Financial education is abysmal in America, and it’s why Dave Ramsey has reached Demi-God status in parts of the country. I have never heard Dave say anything that an 8th grader shouldn't know before moving on to high school. However, we don't teach financial education to any meaningful extent. I mean, how could we fit it in between all the geometry, trigonometry, and calculus you must learn so you are prepared for that one-off question that has started an argument with strangers on Facebook? Unfortunately, this lack of education does not prepare individuals to know what questions to ask advisors and understand their proposed investments. 

Advisors are incentivized to hold your assets. Read that again. They are not directly incentivized to maximize your returns. They are not directly incentivized to call you quarterly or even research the best investments in the marketplace. We are paid as long as you hold assets with us. That creates an interesting dynamic. Before you give an advisor your money, you will get the best version of that advisor. They will show you how they manage money and convince you that you need to change and give them your money. After you have moved your money to them, they shift to constantly convincing you not to make a change away from them. The mantra becomes "Don't rock the boat." An unfortunate by-product of that can be that instead of answering your questions to expand your mind, they answer questions to get you to stop asking questions. 

Here is my question to you:

Would you rather have an advisor who, at all times, will stand by their convictions and tell you what they believe is best for you no matter what you want to hear, or would you rather have an advisor who mirrors what they think you want to hear so you don't move your money?

Not all advisors are the same. Many of you deserve better. Reach out to us today.